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US Auto Bailout Elusive as Republicans try to force industry collapse

With two of America’s major automobile
companies reportedly weeks away from financial collapse, there
continues to be little agreement in Washington on how to craft a
government rescue package that would stave off bankruptcy. The
White House is weighing options days after the Senate defeated a
plan to provide emergency aid to carmakers.

In concept, everyone agrees on the basic
idea behind federal assistance to the troubled U.S. auto industry.
The carmakers, their unions, the Bush administration and leaders of
both parties in Congress have endorsed the idea of a government
bridge loan in return for significant steps to restructure
automobile companies and make them more competitive. It is in the
details that potential deals have fallen apart. Just what steps
will be taken to put carmakers on a path to financial viability,
the sacrifices that will be required of autoworkers and how federal
funding will be provided have all proved highly divisive.

Senate Republicans have demanded the
largest concessions from the auto industry, labor unions and
creditors. Senator Bob Corker of Tennessee says he and other
Republicans voted against last week’s bill after the United
Autoworkers union rejected far-reaching wage and benefits
concessions as a condition for the bridge loan. Speaking on the CBS
program Face The Nation, Corker rejected any suggestion that
Republicans are being obstructionist.

“This has not been about blocking
[legislation]. This has been about trying to find a solution that
works and really causes these companies to be in a position to go
forward in a healthy fashion. But, without all of these shared
sacrifices, that will not happen,” said Corker.

Corker added that union officials had
little incentive to agree to a new round of concessions, since the
White House had already signaled its willingness to provide aid to
carmakers, and the Bush administration could bypass Congress and
tap the existing $700 billion financial rescue package for the
funds.

For weeks, the White House expressed
reluctance to dip into the rescue package, which Congress approved
in October to bail out U.S. financial institutions. But the White
House said it was reconsidering the idea after last week’s Senate
defeat of the automobile aid program, which would have provided $14
billion in bridge loans, while establishing a so-called “car czar”
to help guide the industry to profitability.

White House officials say they are
reviewing financial data on the automakers, while considering
possible courses of action.

For its part, the main autoworkers union
has already offered some concessions, but it is not clear whether
those would be sufficient to allow car companies to become
profitable in the long term.

All three major U.S. carmakers are
headquartered in the state of Michigan, where representatives say
time is running out to save the industry, which they describe as
the backbone of America’s diminishing manufacturing sector.

Democratic Senator Carl Levin of Michigan
also spoke on Face The Nation.

“No other country that produces
automobiles is allowing its industry to collapse. They all have the
same problem. They are all providing loans to those industries,”
said Levin. “This is not unique to the United States.”

In Britain, meanwhile, labor officials are
quoted as urging the government to inject cash into the country’s
automobile industry to ensure it survives the current global
economic slump.